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Airbnb Discussed Convertible Note With Investors

Airbnb Discussed Convertible Note With Investors

(Bloomberg) -- Airbnb Inc. has held early talks with existing investors about issuing a convertible note, according to people with knowledge of the matter.

The home-sharing company, whose plans to go public this year have been thrown into question by the Covid-19 pandemic, is considering the potential debt issue as it discusses various options to help it navigate the economic crisis, said the people, who asked not to be identified because the talks are private.

A convertible note is a form of debt that can be converted into equity at a later date. Music streaming service Spotify Technology SA raised convertible debt from firms such as Dragoneer in the run up to its going public. The potential terms or size of the note that Airbnb has discussed couldn’t immediately be learned. Airbnb could also expand its existing borrowing capacity to raise funds, one of the people said.

Earlier this year, the company had at least $2 billion of cash and a $1 billion line of credit, Bloomberg previously reported. Airbnb has had conversations with advisers about extending the life of the credit facility, one of the people said.

Though Airbnb has cash on hand, additional funds could allow it to snap up businesses that struggle to survive the crisis, one of the people said. Startups have been slashing jobs and the layoffs are expected to spread as the lockdown continues.

A representative for Airbnb declined to comment.

San Francisco-based Airbnb is giving $250 million to hosts on its platform who have lost money from coronavirus-related cancellations at their properties, it said earlier this week.

The startup has been approached by a dozen potential investors, including venture capitalists, private equity firms and sovereign wealth funds, for potential investments, Bloomberg has reported. None of them has set a price tag for the company, but Airbnb is unlikely to maintain the $31 billion valuation it enjoyed during the bull market.

Before the crisis, Airbnb had been leaning toward listing its shares directly for trading on the stock market this year without raising additional capital. It’s now reevaluating that position and may instead pursue a more traditional initial public offering to raise cash for the business. Airbnb, which was unprofitable before the outbreak, faces the likelihood of much steeper losses this quarter and next, after offering refunds for all reservations through at least April 14.

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